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FED Rate Forecast & FMOC Minutes

The FMOC meetings confirm a divided FED.  This should be expected at turning points at times of uncertainty.

Our view has always been that the November rate hike was highly unlikely for two reasons – the data was not conclusive and most importantly the Presidential election.

Moving forward, it depends on the economic data.  Recently there has been some disappointing news from some industrial related stocks (Alcoa for example).  The recent new from China shows weakness in the global economy.  Thus we should not be surprised if economic data comes in weaker than expected.

The labor market reports were in my opinion somewhat mixed with not much wage growth and some slack still present.  Although this could quickly change with revisions and wage inflation a risk.  The FED is keeping a close eye on this.

Finally, the risk of Brexit will be bigger than is currently priced in at the moment even though this has become a bigger issue in the markets recently with the British Pound falling rapidly.